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- Quarterly Financial Report for the Quarter Ended

Canadian Space Agency
-

Quarterly Financial Report
For the Quarter Ended

Management Statement
for the Quarter Ended

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly financial report should be read in conjunction with the - Main EstimatesFootnote 1.

1.1 Mandate and Program Activities

The objectives of the Canadian Space Agency (CSA) are to promote the peaceful use and development of space, to advance the knowledge of space through science and to ensure that space science and technologies provide social and economic benefits for Canadians.

More information is available on the CSA's mandate and Program Activities in the - Departmental PlanFootnote 1.

1.2 Basis of Presentation

This quarterly financial report (QFR) has been prepared by management using an expenditure basis of accounting. The Statement of Authorities annexed to this report includes the CSA's spending authorities granted by Parliament and those used by the CSA, consistent with the Main Estimates and Supplementary estimates voted as at June 30 for fiscal year - compared to -. This QFR has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The CSA uses the full accrual method of accounting to prepare and present its annual financial statements, which are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, that is, a partial accrual method of accounting. Partial accrual method of accounting includes disbursements as well as some accruals for salaries and salary allowances.

This QFR report has not been subject to an external audit. However, it has been reviewed by the members of the CSA Audit Committee, who are satisfied with its presentation and content.

2. Highlights of the Quarterly Financial Results

This section highlights the significant factors that contributed to the changes to the authorities available for the fiscal year, as well as to the quarterly and year-to-date expenditures for the quarter ended .

The following graph provides an overview of variations in available authorities and expenditures. Additional details on these variations are provided in sections 2.1 and 2.2 as well as in the appended annexes.

Authorities available for use and expenditures as at June 30 (in millions of dollars)
Authorities Quarterly
Expenditures
Year to Date
Expenditures
Fiscal Year - 348.9 41.9 41.9
Fiscal Year - 353.8 65.5 65.5

Totals may not add up due to rounding.

2.1 Significant Changes in Authorities (Total Vote Available for Use) between fiscal - and -.

The total vote available for use as at is $348.9 million, and represents a decrease of $4.9 million compared to the same period of the previous year.

Authorities (in thousands of dollars) - - Variance %
Vote 1 - Operating expenditures 170,770 161,269 9,501 6%
Vote 5 - Capital expenditures 112,229 122,420 (10,191) (8%)
Vote 10 - Grants and contributions 56,411 60,966 (4,555) (7%)
Contributions to employee benefit plans 9,463 9,155 308 3%
Spending of proceeds from the disposal of surplus Crown assets 20 28 (8) (30%)
Total budgetary authorities 348,893 353,838 (4,945) (1%)

The increase of $9.5 million in Vote 1 - Operating expenditures is mainly explained by the following items:

  • An increase of $15.1 million due to additional funding received to extend Canada's participation in the International Space Station (ISS) mission from to .
  • An decrease of $2.0 million due to a budgetary transfer from the Operating Vote to the Grants and contributions Vote for the Space technologies development program.
  • The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year.

The decrease of $10.2 million in Vote 5 - Capital expenditures is mainly explained by the following items:

  • A decrease of $7.5 million due to the end of the additional funding obtained for items in Budget related to the security enhancement at John H. Chapman Space Center as well as the purchase and installation of absorber material for the David Florida Laboratory (DFL) Anechoic Chamber.
  • A decrease of $4.4 million compared to the previous year due to the end of the additional funding obtained for the David Florida Laboratory (DFL) infrastructure and corresponding equipment to maintain its space capabilities and improve compliance with applicable building codes and standards.
  • An increase of $2.6 million due to different cash flow requirements for Surface Water & Ocean Topography (SWOT-C) project related activities.
  • The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year.

The decrease of $4.6 million in Vote 10 - Grants and Contributions expenditures is mainly explained by the following items:

  • A decrease of $5.0 million over the same period last year, due to the funding profile of the additional funding obtained in the Budget for the Contribution Program under the Canada-European Space Agency Cooperation Agreement for the Advanced Research in Telecommunications Systems (ARTES) program.
  • An increase of $2.0 million due to a budgetary transfer from the Operating Vote to the Grants and contributions Vote for the Space technologies development program.
  • The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year.

2.2 Significant Changes in Quarterly and Year-to-Date Expenditures (Votes Used) between fiscal - and -

Quarterly and year-to-date expenditures for the quarter ended are of $41.9 million and represent a decrease, quarterly and year to date, of $23.6 million compared to the same period of the previous year.

Expenditures by Vote as at June 30
Expenditures by Vote
(in thousands of dollars)
- - Variance
Quarterly Year to date Quarterly Year to date Quarterly Year to date
Vote 1 - Operating expenditures 23,496 23,496 24,777 24,777 (1,281) (1,281)
Vote 5 - Capital expenditures 2,692 2,692 30,497 30,497 (27,805) (27,805)
Vote 10 - Grants and contributions 13,340 13,340 7,913 7,913 5,427 5,427
Contributions to employee benefit plans 2,366 2,366 2,289 2,289 77 77
Spending of proceeds from the disposal of surplus Crown assets 6 6 12 12 (6) (6)
Total budgetary expenditures by Vote 41,900 41,900 65,488 65,488 (23,588) (23,588)

The decrease of $1.3 million in the quarterly and year to date expenditures in Vote 1 – Operating expenditures, is mainly explained by the following:

  • A decrease of $3.8 million due to variation in the payment schedules for the implementation cycle of activities related to ISS.
  • An increase of $1.8 million due to variation in the payment schedules for the Payments in Lieu of Taxes Program (PILT).
  • An increase of $0.9 million in salary expenses due to the ratification of collective agreements.

The decrease of $27.8 million in the quarterly and year to date expenditures in Vote 5 - Capital expenditures, is mainly explained by the following:

  • The variations the payment schedules for the RADARSAT Constellation Mission (RCM) project.

The increase of $5.4 million in the quarterly and year to date expenditures in Vote 10 – Grants and contributions, is mainly explained by the following:

  • The variations in the payment schedules to the European Space Agency (ESA) as well as the Class Grant Program to Support Research, Awareness and Learning in Space Science and Technology.
Expenditures by Standard Object as at June 30
Expenditures by Standard Object (in thousands of dollars) - - Variance
Quarterly Year to date Quarterly Year to date Quarterly Year to date
Personnel 18,882 18,882 17,972 17,972 910 910
Transportation and communications 796 796 754 754 42 42
Information 561 561 515 515 46 46
Professional and special services 4,304 4,304 8,408 8,408 (4,104) (4,104)
Rentals 285 285 369 369 (84) (84)
Repair and maintenance 609 609 660 660 (51) (51)
Utilities, materials and supplies 604 604 303 303 301 301
Acquisition of land, buildings and works - - - - - -
Acquisition of machinery and equipment 554 554 28,559 28,559 (28,005) (28,005)
Transfer payments 13,352 13,352 7,913 7,913 5,439 5,439
Other subsidies and payments 1,953 1,953 35 35 1,918 1,918
Total budgetary expenditures by Standard Object 41,900 41,900 65,488 65,488 (23,588) (23,588)

The $0.9 million increase in quarterly and year to date expenditures for the Personnel standard object is primarily due to:

  • An increase in salary expenses due to the ratification of collective agreements during the previous fiscal year.

The $4.1 million decrease in quarterly and year to date expenditures for the Professional and special services standard object is primarily due to:

  • A variation in the payment schedules related to the Space Station.

The $28.0 million decrease in quarterly and year to date expenditures for the Acquisition of machinery and equipment standard object is primarily due to:

  • The budget changes and consequently the variations in the payment schedules for the RCM project.

The $5.4 million increase in quarterly and year to date expenditures for the Transfer payments standard object is primarily due to:

  • The variations in the payment schedules to the European Space Agency (ESA) as well as the Class Grant Program to Support Research, Awareness and Learning in Space Science and Technology.

The $1.9 million increase in quarterly and year to date expenditures for the Other subsidies and payments standard object is primarily due to:

  • A variation in the payment schedules for the Payments in Lieu of Taxes Program (PILT).

3. Risks and Uncertainties

The year-to-date expenditures for the 1st quarter of - represent 12% of authorities whereas 25% of fiscal year has passed. The level of expenditure is lower than the - fiscal year (19%) and similar to the - fiscal year (12%) and represents no concerns. The situation concerning the cumulative expenditures will be restored at fiscal year-end when the accruals will be recorded, according to the full accrual method of accounting, combined with the deferral of budgets to the following year.

The specific nature of the Canadian Space Program confronts the CSA with issues related to the advanced technologies used in space missions as well as the international aspect of some projects. For Canada, activities are often carried out in partnership with other spacefaring nations, to share the costs and leverage capabilities. The international nature and technical challenges associated with developing and implementing disruptive technologies, in collaboration with multiple partners, generate risks in the delivery of projects and therefore financial risks associated with the use of funds such as the deferral of funds and costs increase.

Risks also arise from the Canada / European Space Agency (ESA) Cooperation Agreement such as, variations in amounts payable caused by changes in the Gross National Product (GNP) statistics, the fluctuation of the Canadian dollar against the euro (exchange rate), inflation and the enforcement of the ESA's industrial policy. These risks have an impact on both costs and cash flow profiles.

To mitigate all of these risks, the CSA regularly reviews its project portfolio, activity plans, schedules and financial management strategies to adjust to changes brought on by space programs of its key partners (National Aeronautics and Space Administration (NASA), ESA and other space agencies). In addition, the CSA implemented a new investment governance and monitoring framework and rigorous project management practices are in place. These initiatives allow the CSA to track and report on the progress of its commitments, assess the effectiveness of its work, and align its resources with priorities.

Furthermore, CSA manages its financial risks and uncertainties related to Phoenix by adopting risk mitigation strategies. There are a number of actions that CSA has taken to date to help stabilize the pay system, and ensure that employees are paid accurately and on time. As one of the departments whose accounts have not yet migrated to the Pay Centre, compensation services remain on site. The compensation team, which fluctuates to meet demand, monitors closely for payroll inaccuracies and communicates directly with employees to provide clarification and to take swift action to rectify issues, if needed. The team also participates actively in various working groups and other forums led by Treasury Board Secretariat (TBS) and/or Public Services and Procurement Canada (PSPC). Beyond this, Finance staff regularly perform salary reconciliations to monitor and correct expense variances.

4. Significant Changes in Relation to Operations, Personnel and Programs

A significant change in personnel occurred during the first quarter. Two senior leaders exchanged their positions on : Marie-Claude Guérard became the Director General of Space Science and Technology and Jean-Claude Piedboeuf became the CSA's Chief Financial Officer.

Approval by Senior Officials

Approved by,

The original version was signed by Sylvain Laporte, President, in Longueuil, Quebec, on .

The original version was signed by Jean-Claude Piedboeuf, B. Ing., Ph.D., Chief Financial Officer, in Longueuil, Quebec, on .

Annex 1

Canadian Space Agency
Quarterly Financial Report
For the quarter ended
Statement of Authorities
(unaudited)
(in thousands of dollars)
Fiscal Year - Fiscal Year -
Total available for use for the year ending

Table note 2
$
Used during the quarter ended

$
Year to date
used at
quarter-end
$
Total available for use for the year ending

Table note 2
$
Used during the quarter ended

$
Year to date
used at
quarter-end
$
Vote 1: Operating expenditures 170,770 23,496 23,496 161,269 24,777 24,777
Vote 5: Capital expenditures 112,229 2,692 2,692 122,420 30,497 30,497
Vote 10: Grants and contributions 56,411 13,340 13,340 60,966 7,913 7,913
Contributions to employee benefit plans 9,463 2,366 2,366 9,155 2,289 2,289
Spending of proceeds from the disposal of surplus Crown assets 20 6 6 28 12 12
Total budgetary authorities 348,893 41,900 41,900 353,838 65,488 65,488

Annex 2

Canadian Space Agency
Quarterly Financial Report
For the quarter ended
Departmental budgetary expenditures by Standard Object
(unaudited)
(in thousands of dollars)
Fiscal Year - Fiscal Year -
Planned expenditures for the year ending

$
Used
during the
quarter ended

$
Year to date
used at
quarter-end
$
Planned expenditures for the year ending

$
Used
during the
quarter ended
$
Year to date
used at
quarter-end
$
Expenditures:
Personnel 71,722 18,882 18,882 67,470 17,972 17,972
Transportation and communications 5,180 796 796 4,497 754 754
Information 3,199 561 561 3,044 515 515
Professional and special services 178,034 4,304 4,304 121,464 8,408 8,408
Rentals 1,841 285 285 2,950 369 369
Repair and maintenance 1,441 609 609 3,137 660 660
Utilities, materials and supplies 1,742 604 604 1,851 303 303
Acquisition of land, buildings and works 50 - - 445 - -
Acquisition of machinery and equipment 22,538 554 554 81,096 28,559 28,559
Transfer payments 56,411 13,352 13,352 60,966 7,913 7,913
Other subsidies and payments 6,735 1,953 1,953 6,918 35 35
Total budgetary expenditures 348,893 41,900 41,900 353,838 65,488 65,488
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